Gateway Files Breach of Contract Claim
Over Hudson Tunnel Funding Pause by Feds
NEW YORK—The Gateway Development Commission filed a lawsuit on Feb. 2 against the federal government in the U.S. Court of Federal Claims seeking judgment that would release contractually obligated grant and loan funds for the Hudson Tunnel Project.
If additional funding does not become available by this Friday, Feb. 6, construction of the HTP will have to pause, resulting in the loss of nearly 1,000 jobs. In addition to the $205 million in disbursements due to GDC, the complaint seeks damages that will be incurred in the event of a construction pause or termination of existing contracts.
The majority of the budget for the project is funded by federal grants. The U.S. Department of Transportation and GDC have been legally bound to the terms of Capital Investment Grants (CIG), Federal-State Partnership (FSP) Grant, and RAISE Grant agreements, and Railroad Rehabilitation and Investment Financing (RRIF) loans, since July 2024, when full funding for the HTP was secured. More than $1 billion worth of construction and investment has already been spent into building the HTP.
Despite its contractual commitments to fund the project, the federal government has suspended the release of its contractually obligated funds since Oct. 1, 2025. The lawsuit charges that the shifting explanations the Trump Administration has provided for this breach are plainly unlawful.
GDC has utilized available funding sources and credit to keep the project moving forward as planned while federal funding disbursements are paused. However, GDC announced at its Jan. 27, 2026, board meeting that all available sources and credit have been exhausted and construction must pause by Feb. 6, 2026, if federal disbursements do not resume.
For months, GDC stated that it has worked cooperatively with its federal partners to meet their requirements for restoring funding. GDC responded thoroughly and promptly to each request for information about the project’s federally mandated Disadvantaged Business Enterprise (DBE) program and provided documentation that the project is in compliance with the Administration’s latest regulations.
GDC CEO Tom Prendergast said, “Our goal has always been to work with our federal partners and get funding flowing again. At the same time, we must hold the federal government to its contractual obligations so that construction is not halted. It’s our responsibility to fight for the nation’s most urgent infrastructure project and the nearly 1,000 workers whose jobs are threatened.”
In addition to the immediate loss of those jobs, any extended pause would put at risk approximately 11,000 jobs on the current projects, as well as the 95,000 jobs and $19.6 billion in economic activity that construction of the HTP is anticipated to generate overall.
It also increases the risk that the 116-year-old North River Tunnel – already a leading cause of delays that impact hundreds of thousands of daily riders—will shut down, severing the most heavily used passenger rail line in the country and leading to billions of dollars in lost time and productivity.
The HTP is an urgent investment in America’s passenger rail network. The massive project underway involves building a new train tunnel connecting New Jersey and New York under the Hudson River and rehabilitating the North River Tunnel, which has been in service since 1910 and is a source of chronic delays for hundreds of thousands of daily riders.
Published: February 4, 2026